Shelby County home sales are on the rise and foreclosure activity and bank sales are historically low. Attend our “Master Your Market: Mid-Year Review” on Thursday, July 25th at the Memphis Marriott East from 3:00PM-4:30PM to learn about the latest real estate trends in Memphis and Shelby County.

Guest speakers Cheyenne Johnson, Shelby County Assessor, will discuss the 2013 property tax reappraisal and Don Caylor, President of the Memphis Area Home Builders Association, will review the status of new housing and builder activity.

Eric Barnes, Publisher for the The Daily News and The Memphis News, will present Chandler Reports market trends and will moderate the event.

The cost is $10 for Chandler Reports subscribers and $15 for non-subscribers. Attendees will receive an electronic copy of the presentation along with copies of our most popular 2nd Quarter trend reports.

Commercial sales were up 6% at the end of the first quarter with 196 recorded compared to 185 during the first quarter of 2012.

Average sales prices were up 28% to $1.3 million compared to $1.0 million last year.

Automotive, Entertainment, Industrial, Office and Retail properties all had increases in sales activity. Multi-Family, Churches and Schools and Land/Agricultural sales were all down from the prior year.

The average prices for Industrial and Office properties were up 145% and 143% respectively.

Vacant Land Over 1 Acre (33), Warehouses (29) and Office Buildings (18) had the most sales by property type.

The largest commercial transaction recorded in the first quarter was the sale of the Villas at Grays Creek and the sale of the Carrington at Houston Levee in Cordova. The apartment complexes sold for a combined $44.8. Click here to read the details of the transaction.

Residential foreclosures were down 4% in April with 371 recorded compared to 387 last year.

The average amount of a foreclosed home was $86,153 and the average tax appraisal value was $115,660, both down 2-3% from April 2012.

Foreclosure activity was down in virtually every municipality. Memphis had a slight increase of 3% and claimed the most foreclosures with 292 total.

Foreclosure notices were down 13% for the month with 601 recorded compared to 692 last April.

Westwood (38109) had the most foreclosure inventory at the end of the month with 238 homes valued at $14.6 million. Frayser (38127) was a close second with 229 homes in foreclosure inventory totaling $12.3 million.

Fannie Mae owned the most homes in foreclosure inventory with 410 valued at $51.9 million.

2013 will be a big year on many real estate fronts – foreclosures, property taxes and property values.

That was the message industry professionals heard Thursday, Feb. 14, at real estate information company Chandler Reports’ 2012 year-end “Master Your Market” seminar at the Holiday Inn University of Memphis.

Attendees learned about two ongoing issues that affect every homeowner and taxpayer – the 2013 Shelby County reappraisal and the Shelby County school consolidation.

Although separate but related topics, one word was used throughout both presentations from Andy Raines, property tax attorney with Evans Petree PC, and Eric Barnes, publisher of The Daily News and The Memphis News – uncertainty.

“We don’t really know what’s going to happen with the schools yet,” Barnes said. “From a really callous real estate point of view … if the schools are a big driver of where people buy and sell their homes, all of this uncertainty isn’t helping a market move forward. From a somewhat civic point of view, the only people it helps is the private schools.”

Despite the uncertainty with the ongoing legal and legislation situation, Barnes said one thing is almost certain: county taxes are going to go up, perhaps considerably.

“It is a strange dynamic, even if they get a separate municipal school district, county taxes, I think in general, are going to up,” Barnes said. “The city of Memphis, the City Council is committed, and they really mean this, to lowering property taxes in the city. That’s interesting from a real estate point of view. People who say, ‘I want to get out of that really high double taxation in the city of Memphis,’ you could envision over the next four to eight years, a time when that difference isn’t quite as dramatic.”

To that end, Raines said the 2013 county reappraisal is very crucial because, generally speaking, as property taxes go up the value of property goes down. With commercial property, that affects buyers because when taxes are higher, net operating income is lower. With residential property, buyers look at property taxes as a component of what they’re going to pay for the house.

“Taxpayers need to be aware and very diligent about keeping an eye on the property taxes,” Raines said. “In Tennessee, with no state income tax, the property tax and the sales tax has to make a break. In Shelby County, you have unique issues such that the city of Memphis and Shelby County combined rate is significantly higher than any other rate in the state.”

But what value is it that the Shelby County Assessor of Property is trying to put on the property every four years? Raines said under state law, Jan. 1, 2013, is the date at which the fair market value – what a willing buyer would pay for the property and what a seller would be willing to sell it for.

“For a number of years, especially back in the 70s and 80s, the assessor’s values were usually less than you could really sell it for,” Raines said. “But over time, as reappraisals became every four years, that gap has narrowed. Now, the game is really what is the 100 percent fair value?”

Raines said for the first time in history, the value of a reappraisal is going down. How much the value decreases won’t be official until April 20.

“Typically in a reappraisal, because it’s every four years, values were going up, up, up – you would expect that the overall appraised value to go up, perhaps go up significantly,” Raines said. “The best indication we have now is that the overall value of the property will go down.”

The assessor uses a mass appraisal technique and it’s different for residential and commercial. This is because there are 350,583 parcels in the county. For commercial property, various appraisers use an income-approach model based on market data and then tailor it to each property type.

For residential, values come down to neighborhood comparable sales – hence the relevance of a homeowner’s proximity to foreclosures. Raines said the assessor uses “a common sense test” – if a neighborhood has 10 sales and eight of them are foreclosures, deeper analysis is directed at those foreclosures. But if there were only two foreclosure sales out of 10, it’s not as applicable.

Barnes said foreclosure attorneys and trustees are predicting foreclosures will jump about 20 percent – a result of two recent settlements with Bank of America and Wells Fargo.

Barnes said statewide, “the seriously over 90-days delinquent number” is down from the 2008 and 2009 peak. But it’s still historically very high.

“Even though we had this really bad housing recession/depression, there are a lot more loans out there now than there were back in 2005,” Barnes said. “The unemployment rate is better, but it’s still high; lending is happening, but the requirements on buying homes is still difficult. So the foreclosure mess isn’t going away, but it has come down from its real peak. There’s a lot of problematic homes still under the radar.”

Back in 2004 and 2005, in a good economy when unemployment was low and “people were feeling good,” Barnes said there were still 7,500 homes in Shelby County that went into the foreclosure process. Last year, there were 8,000 homes foreclosed in a much worse housing market.

“To some extent, we’re coming down,” Barnes said. “I think it’s going to level out. Even if the economy is booming, there are going to be 7,000 to 8,000 homes that go into foreclosure.”

While we are patiently awaiting a close to the month and hoping for major improvements from July, here are some of the most notable sales we have seen so far this month.

4031 Galloway Drive S sold for $1.69 million on 8/13/2010. This property was foreclosed back in May by Community Bank for $1.7 million. Morris Family Real Estate LLC purchased the property.

6275 Shady Grove E sold on 8/9/2010 for $910,000, 3545 Shea Road sold for $950,000 on 8/18/2010 and 9778 Lipsey Cove sold for $765,000 on 8/11/2010. All of these transactions were non-bank sales.

Drivetime Car Sales Co LLC purchased 2177 Covington Pike on 8/13/2010 from First Tennessee Bank for $1.26 million. The 2-story car dealership was built in 1986 and sits at the southwest corner of Covington Pike and Elmore.

3417, 3435 and 3443 Spotswood Avenue all sold on 8/23/2010 for a total $680,000. University Highlands purchased the properties that were previously foreclosed by InSouth Bank and Sycamore Bank. Click here to read The Daily News Online’s coverage of the sale.

Be informed about notable real estate transactions by subscribing to The Daily News Online’s free email edition of the daily publication. You will be notified each business day about the latest in local real estate, business and legal news.

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